The Ellsberg Paradox and the Neural Foundations of Decision-Making under Uncertainty

Decision-making under uncertainty is a fundamental activity at every societal level. The decisions, however, can vary greatly in the amount of information available about the outcome probabilities. In some, such as gambling on a roulette wheel, probability can be confidently judged from relative frequencies, event histories, or an accepted theory. At the other extreme, such as the chance of a terrorist attack, probabilities are based on meager or conflicting evidence, where important information is clearly missing. Standard decision theory, however, precludes agents from taking into account uncertainty about probabilities. The behavioral violation of this prediction is called the “Ellsberg Paradox.” We studied the Ellsberg paradox using a combination of data from functional brain imaging and brain lesion patients. Our results suggest a general neural circuit responding to degrees of uncertainty, contrary to decision theory. Furthermore, disruption of the circuitry impairs people’s ability to distinguish between degrees of uncertainty.